HOUSTON, Sept 18 (Reuters) - A U.S. judge allowed an

affiliate of hedge fund Elliott Investment Management on

Thursday to move towards completing its offer for

Venezuela-owned Citgo Petroleum's parent through a court-ordered

auction of shares, while restricting rival bidder Gold Reserve ( GDRZF )

from doing the same.

This followed a separate judge in another U.S. court

upholding the validity of Venezuelan state oil company PDVSA's

2020 bonds on Thursday.

Delaware Judge Leonard Stark instructed a court officer

overseeing the auction of shares to terminate a stock purchase

agreement (SPA) with a Gold Reserve ( GDRZF ) subsidiary and sign a new

one with Elliott's affiliate Amber Energy, Gold Reserve ( GDRZF ) said in

a release.

That came at the end of a 4-day sale hearing, where some of

the 15 Venezuela-linked creditors lining up to cash proceeds

from the auction for Citgo's parent asked him to move the

auction forward by granting key agreements with frontrunner

bidder Amber.

The creditors have resorted to U.S. courts seeking

compensation for debt defaults and expropriations in Venezuela.

An SPA is a legally binding contract that outlines the terms

for the sale and transfer of a company's shares. In an auction

of shares, the SPA is a key step to allow a frontrunner to

secure financial commitments and complete regulatory filings for

the shares' transfer.

Gold Reserve's ( GDRZF ) unit Dalinar Energy and Amber have been

competing neck and neck in recent months for Citgo's parent, PDV

Holding.

Because Amber's $5.9 billion offer includes a separate $2.1

billion agreement to pay holders of a defaulted Venezuelan bond,

the Delaware court has recommended it as the best bid. Dalinar's

offer did not include a similar provision.

Judge Stark has not made a final decision on the winner. But

he also denied on Thursday a motion by Gold Reserve ( GDRZF ) to

disqualify Amber's bid, the miner said in a statement.

"The decision was delivered orally from the bench. Gold

Reserve ( GDRZF ) expects a written opinion and order to be issued

shortly," it added.

A New York judge on Thursday confirmed the validity of

defaulted Venezuelan bonds collateralized with Citgo equity,

supporting the holders' claim and boosting Amber's bid.

(Reporting by Marianna Parraga; Editing by Jacqueline Wong and

Muralikumar Anantharaman)